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Stacks of portraits of Mahmoud Abbas stand unused, gathering dust in
the office of his Fatah movement in Beirut's Shatila Palestinian refugee camp. Posters of Abbas  President of the Palestinian Authority, leader of Fatah and chairman of the Palestine Liberation Organization (PLO)  would normally hang in offices and on street corners throughout Lebanon's 12 Palestinian refugee camps. But ever since Israel's incursion into Gaza earlier this year, Abbas has become politically radioactive to the approximately 400,000 refugees languishing in Lebanon, who were livid at his failure to act in defense of the beleaguered Gazans. "Abbas embarrassed us," says one Fatah official charged with delivering Abbas portraits in the camp. "Sometimes we force people to take the posters, but they never put them up." But Abbas may be about to lose a lot more than pride of place for his portrait in the seething refugee camps.

The stack of unused posters is but a symptom of the collapse of support for Fatah in Lebanon, home to the most politically active population of Palestinians outside the West Bank and Gaza. It was the movement's traditional support there that underscored Abbas' mandate, as chairman of the PLO, to negotiate on behalf of all Palestinians. But the failure of Abbas' negotiation strategy to deliver any meaningful change for the prospects of Lebanon's Palestinian refugees has led many  like their kin in the West Bank and Gaza  to transfer their support to Hamas and other radical Islamist groups. (See pictures of Lebanon in crisis.)

The refugees of Lebanon have always been more militant than their brethren inside the Palestinian territories. Most are descendants of those who fled Israeli forces in Galilee during the war of 1948; since then they have been prevented by Israel from returning to their homes. Having lived for six decades without citizenship or basic civil rights in the squalor and despair of refugee camps in a country that bars refugees from owning property and from entering some 70 professions, they have long provided a fertile recruiting environment for militant groups.

Even Abbas' more popular predecessor as Fatah leader, Yassir Arafat, struggled to sell the Oslo peace process to his supporters in Lebanon, where members of Fatah remained committed to armed struggle to "liberate Palestine" and still run guerrilla-training academies. These days, however, even that hard-line Fatah stance is no longer enough for most Palestinians here. High-ranking officials of Abbas' own party fear that he will trade away their right of return to what is now Israel. "Yassir Arafat went into negotiations with the olive branch in one hand and a weapon in the other hand," says one Beirut Fatah commander. "But all Mahmoud Abbas does is negotiate. He gets nothing, but he keeps negotiating. Palestinians believe in military operations because they want to go back to Palestine. They don't want to negotiate." (Read "After Israel's Election, Palestinians Weigh New Intifadeh.")

Hamas, meanwhile, is continuing to grow. The movement uses its financial backing from Iran and other countries to build clinics, kindergartens and social-services centers in every camp. Hamas supporters also get vouchers for medical care at hospitals run by Hizballah, the Lebanese anti-Israeli militant group that's also supported by Iran. And the refugees hear stories about leaders in the West Bank growing rich from embezzled international aid, while refugees see almost nothing in social services from the Palestinian Authority, which is controlled by Fatah. "Fatah isn't helping people," says the Beirut Fatah commander. "Hamas is taking advantage of this. They are entering deep, deep into the population."

So, while leaders of the two groups are holding reconciliation talks in Cairo this week with a view toward creating a unity government that can oversee the rebuilding of Gaza with international aid, in Lebanon the two sides are preparing for confrontation. Fatah officials accuse Hamas of secretly plotting a takeover of the camps in Lebanon in the same way that the movement took control of Gaza in 2007. Hamas officials say they have no military wing in Lebanon, but last month, a fight broke out in Shatila when Fatah men discovered Hamas moving weapons into the camp. In a different camp in southern Lebanon last month, Fatah fighters were taken by surprise when confronted by well-trained Hamas fighters. "They had a military plan, they were well-armed, they screamed "Allahu Akbar," and they were very brutal," says one Fatah man involved in that clash. And one Hamas fighter told TIME that he and others members from the group's military wing are being trained in Syria before returning to Lebanon. Fatah military officials are busy ordering weapons, ammunition and boots for their men.

Victory in Lebanon would give Hamas a significant new strategic
advantage. By agreement of the Arab League, Palestinian camps lie outside the jurisdiction of the Lebanese state, so control of the camps would allow Hamas to train and operate largely without interference from Israel or any Arab states. Moreover, unlike in the Gaza Strip, which is surrounded by an Israeli blockade, in Lebanon Hamas could easily receive weapons by sea, by land from Syria or with help from Hizballah. And a Hamas victory in Lebanon could be the beginning of the end of Fatah. "We already lost Jordan and Syria," says another Fatah commander in Lebanon. "All of them sympathize with Hamas. If we lose Lebanon, then Fatah and all of what it represents will be over."